presented by phil smith, national political director the concord coalition december 3, 2008 la...
TRANSCRIPT
presented by
Phil Smith, National Political Director
The Concord Coalition www.concordcoalition.org
December 3, 2008 La Grange, Georgia
Short & Long Term Budget Trends
Current Fiscal Policy
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0In b
illio
ns o
f 199
6 co
nsta
nt (
chai
n) d
olla
rs
1980 1984 1988 1992 1996 2000 2004 2008 2012
Fiscal Years
Composition of Actual FY 2008 Federal Government Revenues and Outlays (Deficit: $407 Billion)
Interest
Domestic*
Social Security
Medicare & Medicaid
Other Entitlements
Defense
Other Taxes including Estate and Gift
Corporate Taxes
Social Insurance Taxes
Individual Income Taxes
Outlays: $2.96 trillion Revenue: $2.55 trillion*Includes all appropriated domestic spending such as education, transportation, homeland security, housing assistance, and foreign aid. Source: CBO 2008.
In B
illi
ons
of D
olla
rs
Social Security, Medicare, & Medicaid as a Percentage of the Federal Budget
All other Federal Spending
$1.6 Trillion
58%
Social Security, Medicare and Medicaid
$1.1 Trillion
42%
Source: Congressional Budget Office, January 2008.
1967 1987 2007
68%
26%
7%
44%
14%
42% 38%
9%
53%
Mandatory DiscretionaryNet Interest
Source: Congressional Budget Office, January 2008
Mandatory spending is consuming a growing share of the budget
NOTE: Numbers may not add up due to rounding.
Outlays of Select Mandatory Spending Programs
(FY 2008 Projected)
$0
$100
$200
$300
$400
$500
$600
$700
$ B
illio
ns
SocialSecurity
Medicare Medicaid FederalRetirement& Disability
Unemploy-mentComp.
EarnedIncome &Child TaxCredits
FoodStamps
FamilySupport
ChildNutrition
Source: Congressional Budget Office, January 2008
Automatic Growth in the Big Three Entitlements SwampsGrowth of Appropriations
10 Year Growth in Social Security, Medicare and Medicaid
$0
$250
$500
$750
$1,000
$1,250
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Year2009-2018
Spending for Social Security, Medicare and Medicaid. $5.9 trillion
Discretionary Spending $1.9 trillion
Incr
ease
Ove
r 20
07 L
evel
of
Fun
ding
In B
illi
ons
of D
olla
rs
Source: Congressional Budget Office, January 2008.
Change in Composition of Discretionary Spending
1967 1987 2007
68%32%
64%36%
47% 53%
Defense Non-defense
Source: Congressional Budget Office, January 2008
Defense Discretionary Spending as a Percentage of GDP
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
Source: Congressional Budget Office, January 2008
As
a P
erc
en
tag
e o
f G
DP
Outlays of Select DiscretionaryNon-Defense Programs
(FY 2008 Projected)
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$ B
illio
ns
Education Transpor-tation
IncomeSecurity
NaturalResources
& Env.
Veterans Foreign Aid HomelandSecurity
Science,Space, &
Technology
Source: Congressional Budget Office, January 2008*includes ground, air, and water
Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2008)
Source: Congressional Budget Office, December 2008
Average outlays: 21%
Average revenues: 18.3%
Perc
en
tag
e o
f G
DP
Percent of Debt Held by the Public Owned by Foreigners
Source: United States Treasury Department
(1980-2007)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1987 1990 1993 1996 1999 2002 2005
Current Policy Trends Lead to Large Sustained DeficitsFiscal Years 2009-2018
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Fiscal YearCBO September 2008 Baseline
The Concord Coalition Plausible Baseline assumes that discretionary spending grows at the rate of nominal GDP, that war costs slow gradually, and that all expiring tax provisions are extended with AMT relief.
Source: Congressional Budget Office, September 2008 and Concord Coalition analysis.
Bil
lion
s of
Dol
lars
-$7.8 Trillion Deficit
-$2.3 Trillion Deficit
America’s Population is AgingPopulation age 65 and Over
Source: Social Security and Medicare Trustees’ Report, April 2008
0%
5%
10%
15%
20%
25%
2007 2012 2017 2022 2027 2032 2037 2042 2047
Year
Per
cen
tage
of
Pop
ula
tion
Age
d 6
5 an
d O
ver
Americans are living longer and having fewer children
Consequently, fewer workers are available to support each Social Security recipient
1960: 5.1 to 1 Today: 3.3 to 1 2040: 2.1 to 1
Source: Social Security Administration, April 2008
Health Care Costs are Rising Faster Than the Economy
Source: Congressional Budget Office, December 2007
0
5
10
15
20
25
2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057
Year
Per
cen
tage
of
GD
P
All Federal Revenues
In Fiscal Year 2007
All Federal Spending
In Fiscal Year 2007
Assumes that health care cost growth will not exceed GDP growth.
Assumes that health care cost growth continues at the average rate for the past 40 years (2.5 percentage points greater than GDP growth.)
Assumes that health care cost growth rate declines to 1.0 percentage point greater than GDP growth—consistent with the assumption used by the Medicare Trustees.
Benefits promised far exceed dedicated tax revenues
10
12
14
16
18
20
2007 2013 2019 2025 2031 2037 2043 2049 2055 2061 2067 2073 2079 2085
Source: Social Security Trustees’ Report—April 2008 (Intermediate Projections)
Social
Sec
urity
Out
lays
Payroll Tax & Taxation of BenefitsPe
rce
nt
of
Ta
xa
ble
Pa
yro
ll
Calendar Year
Social Security
Cash Deficits
Medicare Costs Soar in the Coming Decades
Calendar Year
As a
Perc
en
tag
e o
f G
DP
General Revenues required to fund the program
Income from dedicated taxes, premiums, and state transfers
Source: Medicare Trustees’ Report, 200818
Social Security and Medicare Part A Cumulative Cash Surpluses and Deficits
In Constant 2008 Dollars—2008 through 2085In
Billion
s o
f C
on
sta
nt
20
08
D
ollars
2008 2010 2020 2030 2040 2050 2060 2070 2080
Calendar Year
Source: Social Security Trustees’ Report—March 2008 (Intermediate Projections)
$496 Billion: Cumulative Social Security Cash Surplus
-$27 Trillion: Cumulative Social Security Cash Deficits
-$55 Trillion: Cumulative Medicare Part A Cash Deficits
-82.6 Trillion: Cumulative Social Security and Medicare Part A Cash Deficits
19
Current fiscal policy is on an unsustainable path
Social Security
MedicaidMedicare
All Other
Interest
Source: Government Accountability Office, March 2008
Average tax revenue
Social Security, Medicare, Medicaid and Interest Consume All Federal Revenues in 20 Years
Source: GAO. 2007.
0%
25%
50%
75%
100%
125%
2002 2007 2012 2017 2022 2027
Year
Per
cen
tage
of
Rev
enu
es
Social Security, Medicare and Medicaid Interest
Washington Needs a Fiscal Wake-Up Call From “We The People”
• The Fiscal Wake-Up Tour consists of speakers from diverse perspectives who are increasingly alarmed by the nation’s long-term fiscal outlook.
• Our mission is to cut through the usual partisan rhetoric and stimulate a more realistic public dialogue on what we want our nation’s future to look like, along with the required trade-offs.
• Elected leaders in Washington know there is a problem, but they are unlikely to act unless their constituents — We The People — demand it.
Key Points of Agreement
Members of the Fiscal Wake-Up Tour do not necessarily agree on the ideal levels of spending, taxes and debt, but we do agree on the following key points:
• Current fiscal policy is unsustainable
• There are no easy solutions, such as cutting waste fraud and abuse or growing our way out of the problem.
• Finding solutions will require bipartisan cooperation and a willingness to discuss all options.
• Public engagement and understanding is vital in finding solutions.
• This is not about numbers. It is a moral issue.
The Concord Coalition needs your help!
There are a variety of ways to help…
Get educated, get involved, and be heard
Write letters to the editor, call into radio programs and C-span
Communicate with your Representative and both Senators
Host house parties where you show the documentary IOUSA
Join groups like the Concord Coalition
Popular Myths that Impede Action
• Myth: We can grow our way out of difficult budget choices.
• Myth: Eliminating waste in government programs will solve the deficit problem.
• Myth: The deficit problem can be solved by delivering health care more efficiently.
• Myth: We just need to raise taxes starting with rolling back some or all of the Bush tax cuts.
• Myth: Cutting taxes will increase revenues.